Pre-holiday Volume

Pre-holiday Volume

Tuesday’s anemic price action though bullish, recorded activity that was substantially lower than the pre-holiday volume of Christmas and the New Year.  The pending CPI report Thursday and the big bank reports Friday, both happening before the bell, have raised the market uncertainty understandably high.  We should expect big price moves by the end of the week, but the question is, in what direction will all this wound-tight emotion explode?  Trade wisely because this is a  dangerous market condition for retail traders!

Asian markets mostly rallied overnight, with only Shanghai seeing a modest decline while we slept.  European markets are in rally mode this morning, looking to recover Tuesday’s weakness with uncertainty ahead.  U.S. futures are once again pumping a bullish open, trying to put on a brave face with another day of low volume likely as we wait on the CPI and the official kickoff of earnings.  Buckle up anything is possible by the end of the week.

Economic Calendar

Earnings Calendar

We have a very light day on the earnings calendar, with just one confirmed report coming from KBH after the bell. 

News & Technicals’

Wells Fargo is stepping back from the housing market.  Instead of its previous goal of reaching as many Americans as possible, the company will now focus on home loans for existing bank and wealth management customers and borrowers in minority communities.  As part of its reduction, Wells Fargo is shuttering its correspondent business that buys loans made by third-party lenders and “significantly” shrinks its mortgage-servicing portfolio through asset sales.  Altogether, the shift will result in a fresh round of layoffs for the bank’s mortgage operations, executives acknowledged, but they declined to quantify how many jobs will be lost. 

Fed Chairman Jerome Powell noted that stabilizing prices requires making tough decisions that can be unpopular politically.  In other remarks, the central bank leader said the Fed is “not, and will not be, a ‘climate policymaker.’” 

The World Bank slashed its 2023 global economic growth outlook to 1.7% 2023 from its earlier projection of 3%.  It would mark “the third weakest pace of growth in nearly three decades, overshadowed only by the global recessions caused by the pandemic and the global financial crisis,” the World Bank said. 

Although the indexes held the breakout support, the activity was lower than the pre-holiday volume of both Christmas and New Year trading.  Unfortunately, there is a good chance we could see more of the same with the light earings and economic calendar on Wednesday.  The uncertainty of the Thursday CPI report and the official beginning of 1st quarter earnings as the big banks begin to report on Friday is likely the reason for the anemic volume.  The last couple of weeks of range-bound trading has wound the spring on the indexes very tight, and it’s likely to create some tremendous price volatility at the end of the week.  The big question is, which way will it pop?  Be careful not to overtrade out of boredom, and be prepared for the explosion of emotion just around the corner.

Trade Wisely,

Doug

Potential Topping Patterns

Potential Topping Patterns

The bulls pushed hard, but overhead price resistance found bears waiting and willing to fight back, leaving some potential topping patterns behind.  Jerome Powell’s comments this morning will likely cast the deciding vote on whether the bulls matain the Friday consolidation breakout or if the bears regain the upper hand.  With a pending CPI report and big bank earnings just around the corner, speculation and uncertainty are high so brace for considerable volatility in the days ahead.  Anything is possible!

During the night, Asian markets closed the day mixed with an eye on Jerome Powell.  European markets trade modestly bearish across the board this morning, weighing inflation concerns and pending Fed comments.  U.S. futures point to a gap as we wait to find out if the FOMC plans to stay on the hawkish path, bucking all the talking heads trying to promote the pivot narrative.  Brace yourself for wild price action likely in the days ahead.

Economic Calendar

Earnings Calendar

We have just five confirmed reports this Tuesday, but only a couple of them are somewhat notable such as ACI and BBBY. 

News & Technicals’

The global investment bank is letting go of as many as 3,200 employees starting Wednesday, according to a person with knowledge of the firm’s plans.  That amounts to 6.5% of the 49,100 employees Goldman had in October, which is below the 8% reported last month as the upper end of possible cuts.  However, other investment banks are adopting a “wait and see” attitude: If revenues are tracking below estimates in February and March, the industry could cut more workers, said a person familiar with a leading Wall Street firm’s processes. 

According to an email obtained by CNBC, Disney CEO Bob Iger told hybrid employees on Monday they must return to corporate offices four days a week starting March 1.  Iger’s four-day-per-week stipulation is relatively strict compared with other large companies, many of which have opted for two or three mandated in-office days for hybrid employees.  Moreover, it comes less than two months after he returned to the company’s helm. 

CNBC’s Jim Cramer told investors to stay away from tech stocks, even after their gains on Monday.  “These short-term sector rotations like we saw today — they’re irrelevant because they can’t last.  Think renters, not owners.  The fundamentals, now they last,” he said. 

The bulls followed through on Monday but faded into the afternoon, leaving behind some worrisome potential topping patterns at price resistance.  Earnings uncertainty and worries about higher rates inspired the bears to push back as we wait on a Jerome Powell speech this morning.  Will he continue to sound hawkish disappointing traders that talking heads continue to push the narrative of a Fed pivot?  We will soon find out and should expect substantial price volatility as the market reacts to his comments.  Past that, we won’t have much for the market to react to as we wait on the Thursday CPI and the start of big bank earnings.  Nevertheless, speculation remains high, so plan your risk carefully.

Trade Wisely,

Doug

Classic Short Squeeze

Classic Short Squeeze

The bulls fueled by hope of declining inflation looked past economic data showing contracting economy to break the consolidation trigging the classic short squeeze.  The DIA remains the strongest index and the only one above its 50 day morning average and long-term bearish downtrend.  With worries of recession and the ramp up for 1st quarter earnings beginning this week traders should plan for considerable price volatility.  There is no shortage of highly emotional speculation so expect big point moves and punishing whipsaw as well as full overnight reversals as drama unfolds.

While we slept Asian markets rallied with the tech heavy HSI leaning the way higher up 1.89% at the close.  European markets also trade mostly bullish with the reopening of China providing the inspiration.  U.S. point to bullish open trying to follow through on Friday’s but with so much overhead resistance in the SPY, QQQ and IWM we can’t rule out the possibility of a pop and drop, so be careful rushing in with a fear of missing out. 

Economic Calendar

Earnings Calendar

We start to step up on the earnings this week and should expect considerable volatility with some big bank earnings at the end of the week.  Notable for Monday include AYI, AZZ, JEF, CMC, PSMT, TLRY, WDFC.

News & Technicals’

Bolsonaro’s supporters stormed Brazil’s Congress, Supreme Court and presidential palace in Brasilia on Sunday.  The demonstrators refused to accept Bolsonaro’s legitimate electoral defeat to leftist rival Luiz Ignacio Lula da Silva.  “The coup plotters who promoted the destruction of public property in Brasilia are being identified and will be punished,” Lula said in a tweet, vowing to resume work in the palace on Monday.

At around 35,000 feet, the Virgin Orbit rocket will be deployed over the Atlantic, carrying nine small satellites into orbit in what is known as a horizontal launch.  Crowds are expected to gather to watch the event, with Spaceport Cornwall having invited the general public to witness what they have described as a “historic moment.”  The designated launch event will also include a “silent disco” tent.

The U.S. House of Representatives elected Kevin McCarthy of California as speaker in the 15th round of votes early Saturday.  McCarthy made extraordinary concessions to win over a small bloc of far-right holdouts who blocked his speaker bid.  McCarthy said the tense showdown on the House floor this week was proof that he is not someone who gives up easily.

Although Friday’s economic data continued to show a slowing economy the hope that inflation pressures are easing inspired the bulls to break the consolidation log jam trigging the classic short squeeze.  Though we have a relatively light economic calendar this week Tuesday we will have to deal with a Jerome Powell speech and CPI reading on Thursday as earnings season ramps up.  Emotion and uncertainty are high so traders should plan for considerable volatility as worries of recession continue to loom.  The Dow remains the strongest of the indexes with the SPY, QQQ, and IWM remain under the long-term bearish trends and considerable resistance.  Expect substantial point whipsaws and punishing overnight reversals in the days and weeks ahead. 

Trade wisely,

Doug

Consolidation Continues

Consolidation Continues

While encouraging to see a second day of gains, not much changed yesterday as the wide-range consolidation continues, unable to break through the upper resistance at the close.  However, there seems to be a willingness to ignore the economic data pointing to a contraction of the U.S. economy.  Today we get more job data along with international trade and energy figures as FOMC members resume their public conversations.  Observe the substantial overhead resistance levels if they beak for a possible short squeeze to be triggered.  On the other hand, if it fails to break, prepare for selling to resume pushing back into the consolidation range.

Asian markets saw gains overnight, and the European markets trade mixed as they came to terms with the continued hawkishness of the FOMC.  U.S. futures have once again rebounded off overnight lows heading into the open ahead of earnings and potential market-moving economic reports amid some substantial layoff news in the tech sector. 

Economic Calendar

Earnings Calendar

We have a bit more activity on the earnings calendar today.  Notable reports include ANGO, BBY, CAG, STZ, HELE, LNN, NEOG, SCHN, & WBA.

News & Technicals’

Amazon, one of the largest employers in the U.S., is scaling back more than it had anticipated.  Andy Jassy, Amazon’s CEO, said an employee leaked the plans, prompting him to make a public announcement.  “Amazon has weathered uncertain and difficult economies in the past, and we will continue to do so,” Jassy wrote in a memo.  However, they plan to cut over 18,000 positions from the reported number of 10,000.  Salesforce is cutting 10% of its personnel (more than 7000 positions) and reducing some office space as part of a restructuring plan.  Co-CEO Marc Benioff told employees that customers had been more “measured” in their buying decisions in the challenging macroeconomic environment.  The cloud-based software company let go of hundreds of employees in November.  CNBC’s Jim Cramer on Wednesday warned investors that the tech industry would likely see more layoffs due to continuing macroeconomic headwinds. 

The U.S. House of Representatives adjourned for the night with no one being elected speaker, paralyzing Congress and deepening the longstanding schisms within the Republican Party.  After six votes over two days, GOP leader Kevin McCarthy, R-Calif., failed to secure enough support to win the House speakership.  The latest votes saw GOP holdouts nominate and vote for Florida Rep. Byron Donalds.

According to analyst estimates, Samsung’s profit could nosedive nearly 50% when it reports its fourth-quarter earnings guidance.  The pessimism stems from a rapid fall in NAND and DRAM memory prices.  Samsung is the global leader in memory chips.  However, NAND and DRAM prices have fallen sharply in the fourth quarter due to a lack of demand for the products they eventually go into, such as PCs.

While it may have been refreshing to see a second day of gains, the wide-ranging consolidation continues, with the price action unable to breach upper resistance levels by the close of the day.  The jobs data continues to roll in such a manner to keep the Fed engaged in continuing to raise rates, and according to the FOMC minutes released yesterday, their willingness to do so seems resolute.  In addition, the ISM number indicated that the U.S. economy is still in contraction, adding worry to recessionary thoughts for the year ahead.  Today we get more job data along with international trade and energy figures as Fed members resume public comments.  Keep a close eye on the consolidation resistance as they continue to pump the premarket, trying to inspire enough buying to break through despite the poor economic numbers. 

Trade Wisely,

Doug

Choppy Consolidation

Tuesday’s price action had plenty of up/down drama but, at the end of the day, left more questions than answers as the choppy consolidation in the indexes continues.  The sharp selling in Apple and Tesla didn’t help market sentiment as the uncertainty of 2023 weighs heavily, with PMI numbers continuing to show contraction in the economy.  Today we face ISM, JOLTS, and FOMC minutes release with another light day of earnings as the bulls and bear fight to find inspiration to break the consolidation log jam.  Expect more chop and uncertainty today.

Overnight Asian markets mostly rallied, with the tech-heavy HIS leading the way up 3.22% at the close.  European markets are decidedly bullish this morning, buoyed after Germany published a better-than-expected inflation rate of 9.6%.  Once again, the futures point to a gap up open to test the consolidation resistance hoping to inspire the bulls ahead of the economic data.

Economic Calendar

Earnings  Calendar

We have five confirmed earnings reports for today, but only these three are somewhat notable RGP, SLP &UNF.

News & Technicals’

The House of Representatives adjourned for the day Tuesday without a Speaker after Republican leader Kevin McCarthy failed in three consecutive votes to secure enough support to be elected to the post.  After the first ballot resulted in votes for several Republicans, the next two rounds saw McCarthy’s opponents coalesce around a new contender: Rep. Jim Jordan of Ohio, a longtime McCarthy ally.  It was the first time in 100 years that the majority party had failed to coalesce around a candidate for Speaker, and it was uncertain what McCarthy’s next steps would be. 

Nezha, named after a feisty Chinese mythological character, claims its car deliveries will more than double in 2022.  The total surpassed Nio’s, emphasizing its focus on the premium segment while hinting at plans to launch a mass-market brand.  While Nezha sells budget-priced vehicles, similar to the highly popular Hongguang Mini EV, Nezha’s vehicles are larger. 

In its 2023 macro outlook, Goldman Sachs forecasts a 1.2% contraction in the U.K. real GDP over the course of this year, well below all other G-10 (Group of Ten) major economies.  A 0.9% expansion would follow this in 2024.  The figure places Britain only fractionally ahead of Russia, which is projected to see a 1.3% contraction in 2023 as it wages war in Ukraine and weathers punitive Western economic sanctions. 

Tuesday’s price action left behind more questions than answers as the wide rage choppy consolidation continues with so much uncertainty about the path forward in 2023.  Economic data continued to show the U.S. Economy is slowing yesterday, with PMI numbers still in contraction.  Adding to the worries was the sharp selling in both Apple and Tesla that not so long ago were considered market bellwethers that could do no wrong.  This morning we face a potential market-moving ISM reading, a JOTLS report that has proven stubbornly sticky, and FOMC minutes likely confirm a resolute FOMC in combatting inflation.  That said, the U.S. futures are again trying to pump up the bullish hope in premarket, suggesting another gap into the consolidation resistance. 

Trade Wisely,

Doug

Powell in Focus

Powell in Focus

Over-speculation created a wild ride on Tuesday, and all that emotion could explode in another round of extreme price volatility with Powell in focus.  Will he deliver the hoped-for pivot comments at the press conference allowing Santa to party with a rally into the year’s end?  Or will he continue the hawkish tough talk on inflation and unleash the Grinch?  With so much uncertainty, plan for a choppy morning session as we wait, followed by another wild ride of volatility this afternoon that may set the market direction for the remainder of the year. 

Asian markets rallied with modest gains after a relaxing read on inflation with all eyes on Powell.  European markets, however, trade in the red this morning, with energy prices easing their inflation slightly.  With Powell’s press conference on tap, U.S. futures have reversed some overnight bullishness to suggest a flat to slightly bearish open.  However, anything is possible with market emotion high, so plan your risk carefully!

Economic Calendar

Earnings Calendar

We have a few more reports on the Wednesday earnings calendar, but the market-moving reports are falling by the wayside.  Notable reports include LEN, MITK, NDSN, REVG, & TCOM.

News & Technicals’

A Bahamas judge denied FTX founder Sam Bankman-Fried bail and said he should be remanded to custody until February 2023, citing a heightened flight risk for the onetime billionaire.  Bankman-Fried claimed he was down to just $100,000, a stark comedown for the former crypto titan.  The Digital Commodities Consumer Protection Act is among the solutions lawmakers will consider as they probe the implosion of crypto exchange FTX and try to implement industry safeguards.  The legislation would give the Commodity Futures Trading Commission more oversight.  However, some crypto advocates say it doesn’t go far enough to protect certain kinds of exchanges.

The Federal Reserve is expected to raise interest rates by a half percentage point Wednesday yet signal it will continue its battle against inflation.  However, economists expect Fed Chair Jerome Powell to tilt toward the hawkish side in an effort to impress on markets that the central bank is not ready to give up its rate-hiking stance.  CNBC’s Jim Cramer on Tuesday outlined what needs to happen for the Federal Reserve to finally beat inflation.  “Without a well-deserved crash in crypto and a sign of higher unemployment acknowledged by [Federal Reserve Chair] Jay Powell, this CPI reading has to be treated as a one-off number,” he said.

Tuesday was a wild ride of over-speculation and over-hyped emotion, with Powell in focus!  Investors continue to hope for an FOMC pivot, but Powell is expected to raise rates by another 50 basis points today.  However, it is not likely that the act of raising rates will cause market volatility this afternoon; the press conference will light up the eratic market emotion after that.  Nevertheless, if Powell continues his tough stance on inflation and tamps down the idea of a quick pivot, it will likely disappoint the market and diminish the hope of an end-of-year Santa rally.  However, if he is perceived to be ready to back off and become more dovish, the market will celebrate, and the Santa rally could party until the end of the year!  Although it may be a choppy morning session, as we wait, the pent-up emotion will likely explode in wildly volatile price action this afternoon.  Plan carefully amid the massive uncertainty of what comes next.

Trade Wisely,

Doug

Big Surprise

My expectation of a hurry-up and wait day turned into a big surprise as the market surged higher in the last hour of trading, with investors chasing risk with market-moving data the rest of the week.  Oddly, at the same time, the fear spiked as the VIX spiked to 25 handles, with the SPY and QQQ suffering from anemic volume.  Clearly, the appetite for speculative risk is alive and well despite the FOMC’s efforts to bring valuations down.  I’m not confident that’s a good thing with a world recession on the horizon.  Expect big price moves with morning gaps and possible intraday whipsaws with all the data coming our way the rest of the week.

Asian markets traded with mixed results as China relieves pandemic travel restrictions.  European moved higher this morning with all eyes on U.S. inflation data.  U.S. futures so tremendous confidence in the pending CPI number and the coming FOMC decision extending Monday’s buying surge, suggesting a gap up ahead of the data.  Plan for considerable price volatility as the market reacts.

Economic Calendar

Earnings Calendar

Notable reports for Tuesday include ABM, CNM, & PLAB.

News & Technicals’

Following his arrest in the Bahamas on Monday, FTX founder Sam Bankman-Fried faces the potential of a lengthy prison sentence.  FTX collapsed last month following a liquidity crunch at the crypto exchange.  “It is inconceivable to me that the Justice Department would have charged this case unless they were confident they could extradite him,” Renato Mariotti, a former federal prosecutor, told CNBC.  In addition, FTX CEO John J. Ray III plans to tell the House Financial Services Committee on Tuesday that the cryptocurrency exchange under Sam Bankman-Fried had “unacceptable management practices.”  Ray said in his remarks that FTX went on a “spending binge” from late 2021 through 2022 when approximately ”$5 billion was spent buying a myriad of businesses and investments, many of which may be worth only a fraction of what was paid for them.”  He also said, “loans and other payments were made to insiders in excess of $1 billion.” 

Binance, the world’s largest cryptocurrency exchange, said Tuesday it is pausing withdrawals of the stablecoin USDC while it carries out a “token swap.”  Changpeng Zhao, CEO of Binance, tweeted on Tuesday that the exchange is seeing an increase in withdrawals of USDC.  The move comes as investor concerns grow about Binance’s stability following the collapse of rival exchange FTX as well as a report of a potential criminal investigation from the U.S. government.

Without question, Monday was a big surprise for me as the bulls raced forward, heading into the very uncertain data points of the CPI and the FOMC rate decision.  The bullishness was again focused on the Dow while the SPY and QQQ continued to suffer from anemic volume.  As the indexes surged the last hour of the day, the VIX simultaneously spiked to 25 handles suggesting fear expanded during the rush to buy.  An extraordinary occurrence, indeed, that one might infer only increased the danger as we wait for the market moving reports.  One thing that seems evident after yesterday’s surge is that wild speculation still exists despite the Fed’s efforts to tamp it down.  I’m not sure that’s a good thing facing a worldwide recession in 2023.  Fasten your seat belts tightly for the next few days are likely to include significant opening gaps and big point whipsaws, so plan your risk carefully!

Trade Wisely,

Doug

Hurry-up and Wait

Hurry-up and Wait

Though the premarket pump will try to engage, the fear of missing out today will likely become the classic hurry-up and wait with CPI and FOMC events ahead.  Friday’s close adds to the uncertainty, with indexes hovering just above critical price support levels.  Will the coming data inspire the hoped-for Santa Clause rally, or will Powell be the Grinch that stole Christmas?  While today may prove to be a chop fest, as we wait, anything is possible in the days ahead.  Expect some sudden and substantial price reactions as Christmas hope battles recession worries.

Asian markets started the week lower, led by selling in Hong Kong down 2.20% as investors wait on U.S. data.  European markets also traded primarily lower this morning on the uncertainty of the inflation and rate decisions ahead.  However, in the U.S., premarket futures try to put on a brave face with modest bullishness with index prices posied near essential support levels.  Plan for a choppy, light day as we wait.

Economic Calendar

Earnings Calendar

Although we have a few notables, it will be a very light week on the earnings calendar.  Notables for Monday include COUP & ORCL.

News & Technicals”

Rivian said Monday it was pausing plans to manufacture commercial electric vans in Europe and would “no longer pursue” the agreement it made with Mercedes-Benz.  However, the U.S.-based electric vehicle manufacturer said it remains open to exploring future work with Mercedes-Benz “at a more appropriate time.”  Mercedes-Benz said Rivian’s decision would not impact the timeline of its electrification strategy or the planned ramp-up of its new electric vehicle manufacturing site in Jawor, Poland. 

Inflation has already peaked, but it will remain above pre-Covid levels in 2023, said David Mann, chief economist for Asia-Pacific, Middle East, and Africa at the Mastercard Economics Institute.  “Inflation has seen its peak this year, but it will still be above what we had been used to pre-pandemic next year,” Mann told CNBC’s “Squawk Box Asia” on Friday.  He said it’ll take a few years to return to 2019 levels. 

Before founding Crypto.com, Kris Marszalek was involved in multiple ventures that collapsed, including one where suppliers claimed they could not access their earnings.  Over a decade ago, their manufacturing company paid Marszalek and his business partner millions of dollars months before it entered bankruptcy.  In a tweet thread published ahead of this story, Marszalek wrote, “startups are hard” and “you will fail over and over again.”  

Although we see a little premarket bullish blustering today is likely to be nothing more than a classic hurry-up and wait for the Tuesday CPI and the Wednesday FOMC.  I would expect some early price gyrations that will devolve into an understandable choppy price day with the uncertainty ahead.  Technically speaking, there is a lot at stake as the major indexes, with the indexes closing very near critical support levels last Friday.  If the CPI and FOMC decision inspires the bulls, we could see a Santa rally begin.  However, if the reports inspire the bears and support levels break under the pressure, Powell may be seen as the Grinch that stole Christmas.  Anything is possible, so position yourself carefully, avoiding overtrading your bias because the price moves are likely to be sudden and substantial in reaction to the coming data.

Trade Wisely,

Doug

2023 Recession

With a growing number of major financial institutions and company CEOs dominating the news cycle, warning of a 2023 recession, the bears extended their attack Tuesday.  Though the selling raised some uncertainty for a Santa rally, critical support levels in the index charts held.  However, we will need the bulls to step up and defend now, or the bears could quickly create some technical damage that may be difficult to recover.  Earnings and economic reports could provide some inspiration, but recession worries, pending PPI and FOMC decisions, will likely keep uncertainty high for the near future.

While we slept, Asian markets sold off, with Hong Kong leading the way, down 3.22% as trade data disappointed.  European markets also trade in the red this morning as the bear market rally sentiment diminishes with worries of a looming recession.  U.S. futures reversed modest overnight bullishness to suggest a slightly bearish opening ahead of earnings and economic data.  Uncertainty is high so prepare for news driving price volatility to continue.

Economic Calendar

Earnings Calendar

We have more activity on the Wednesday earnings calendar, but unlikely market-moving reports.  Notable reports include AI, BF.B, CPB, GME, KFY, LOVE, OLLI, SPWH, THO, UNFI, & VRNT.

News & Technicals’

CEOs from JPMorgan, General Motors, Walmart, United, and Union Pacific are preparing for an economic slowdown.   Rising interest rates, inflation, and geopolitical concerns are among the issues cited.  The companies are taking a conservative approach to 2023.  Goldman Sachs and Morgan Stanley have cut workers ahead of a possible economic downturn, but Bank of America CEO Brian Moynihan and his CFO have said they don’t see the need for layoffs.  That doesn’t mean Bank of America’s headcount won’t shrink as it looks to cut expenses.  “We’re up to about 215,000 [employees]; we need to run that backdown,” he said Tuesday. 

Fink has become an outspoken proponent of “stakeholder capitalism” and, in his annual letter to CEOs earlier this year, pushed back against accusations that the giant asset manager was using its size to push a political agenda.  Bluebell — an activist fund with around $250 million in assets under management that holds a tiny stake in BlackRock — has previously targeted the likes of Richemont and Solvay and had a hand in successfully forcing management to restructure at Danone. 

With a growing number of banks and company CEOs warning about a 2023 recession, the bears found the inspiration to matain their attack on Tuesday.  However, on the good news side of the selling, it has substantially relieved the frothy overbought condition of the Dow and key support levels held at yesterday’s close.  The bad news is that recession worries continue to grow and wouldn’t take much to push the SPY, QQQ, and IWM below support to possibly spoil the hoped-for Santa rally.  Today we have a few more earnings reports, Mortgage Apps, Productivity and Costs, and Petroleum Status numbers to inspire the bulls and bears.  With a PPI number this Fraidy and an FOMC decision next week, understandably, making traders question the uber-bullish stance of late.  With the big financial institutions battening down the hatches and layoff projections rising, plan for a volatile end to 2022.

Trade Wisely,

Doug

Bears had a Little Party

Reacting to hot ISM services numbers, the bear had a little party on Monday, producing a big point move in the indexes but support levels and bullish trends remained intact by the close.  Though traders continue to worry about future FOMC rate increases and recession, the hope of the last push higher for Santa remains strong.  However, plan for the big point whipsaws and overnight gaps to continue as the bulls and bears fight it out as the uncertain path forward for the economy drives the wild emotion.

Asian markets closed mixed in a volatile overnight session, with China easing some lockdown restrictions.  However, European markets trade modestly bearish across the board this morning as future recession fears loom.  U.S. futures gave back overnight gains to currently suggest a flat open as they wait on earnings and economic data to try and find inspiration.  This could prove to be an interesting bull-bear battle at vital support, so plan carefully and expect considerable volatility. 

Economic Calendar

Earnings Calendar

As usual, near the end of the quarter, we have a few earnings stragglers we will have to keep track of, but their numbers will continue to dimmish over the month.   Notable reports include AVAV, AZO, CASY, CONN, PLAY, MDB, SFIX, SIG, SWBI, & TOL.

News & Techinicals’

The investment by TSMC is one of the largest foreign investments in U.S. history and the largest in Arizona.  Semiconductor chips are used in everything from computers and smartphones to cars, microwaves, and healthcare devices.  Once the plants open, they will produce enough chips to meet the U.S. annual demand.  The announcement comes in the wake of the passage of the CHIPS and Science Act signed into law in early August. 

Microsoft President Brad Smith said the company offered Sony a 10-year contract to make each new release of Call of Duty available on Sony’s PlayStation console at the same time as the Xbox.  Microsoft hopes the move will assuage regulators’ and its rivals’ antitrust fears over its proposed $69 billion acquisition of Activision Blizzard, the developer behind Call of Duty.  In addition, any move to make Call of Duty unavailable to Sony’s PlayStation console would be “economically irrational,” Microsoft’s President Brad Smith said. 

The bears had a little party on Monday, reliving some of the short-term overbought condition, but they seemed to lack conviction, with index charts holding supports and bullish trends still intact.  So although the big point move may have been a bit disconcerting, the move could prove to be very positive as long as the bulls defend the price supports.  Today we have a few more earnings reports that could provide some inspiration with only the International Trade numbers on the economic calendar.  Of course, it would be healthy if the indexes consolidated in a smaller price trading range, but with the all-or-nothing condition of the market, that’s likely just wishful thinking.  Keep a close eye on the support and resistance levels and plan for the choppy volatility to continue.

Trade Wisely,

Doug

Skip to toolbar